Tax Rounding In Reports

Billy Fluck
Billy Fluck
  • Updated

Spektrix is able to automatically calculate Tax, Net and Gross rates for all items you sell.  We can then output these calculations on reports and invoices so that you can send them straight onto your customers or agents.  

In the UK this is Value Added Tax (VAT) but the same logic applies in other areas. 

 

How Spektrix Rounds Tax

Spektrix calculates Tax at item level - like so:

Item Gross Vat Rate Vat Net
Child Ticket £10.00 S (20%) 1.666666667 8.333333333
Child Ticket £10.00 S (20%) 1.666666667 8.333333333
Adult Ticket £16.00 S (20%) 2.666666667 11.333333333
Adult Ticket £16.00 S (20%) 2.666666667 11.333333333

Tax is then rounded at item level and stored in the system like this

Item Gross Vat Rate Vat Net
Child Ticket £10.00 S (20%) £1.67 £8.33
Child Ticket £10.00 S (20%) £1.67 £8.33
Adult Ticket £16.00 S (20%) £2.67 £13.33
Adult Ticket £16.00 S (20%) £2.67 £13.33
Total £52.00   £8.68 £43.32

 

In your reports we can group the items together in different ways and sum the amount of Tax for those groups.  We sum the figures after they have been rounded:

 

Item Gross Vat Rate VAT Net
Child Tickets (x2) £20.00 S (20%) £3.34 £16.66
Adult Tickets (x2) £32.00 S (20%) £5.34 £26.66
Total £52.00   £8.68 £43.32

 

or

 

Item Gross Vat Rate VAT Net
All Tickets (x4) £52.00 S (20%) £8.68 £43.32
Total £52.00   £8.68 £43.32

 

Customers may question the fact that the Total VAT is not always 20% of the Total Gross (because a penny of VAT has been lost or gained on each item in the calculation). This isn't a problem as the guidance from HMRC states that rounding on a line by line basis is acceptable. The most important issue is that rounding is always consistent.

This is why we round at item level - the VAT will always be rounded in the same way no matter how the items in your reports are grouped. In all of the examples above - the total VAT will always add up to £8.68.

If we were to leave things un-rounded in the system and only round the totals in your reports then you would risk getting different amounts depending on the way you grouped the items:

Item Gross Vat Rate Vat Net
Child Ticket £10.00 S (20%) 1.666666667 8.333333333
Child Ticket £10.00 S (20%) 1.666666667 8.333333333
Adult Ticket £16.00 S (20%) 2.666666667 11.333333333
Adult Ticket £16.00 S (20%) 2.666666667 11.333333333
Total £52.00   £8.67 £43.33

 

Item Gross Vat Rate VAT Net
Child Tickets (x2) £20.00 S (20%) £3.333333333 £16.666666667
Adult Tickets (x2) £32.00 S (20%) £5.333333333 £26.666666667
Total £52.00   £8.67 £43.34

 

Item Gross Vat Rate VAT Net
All Tickets (x4) £52.00 S (20%) £8.666666667 £43.333333333
Total £52.00   £8.68 £43.33

 

 

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